Unit Two: Firms, Markets, and Economic Stakeholders Definitions Review

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Corporation

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Corporation

legal entities that are seperate and distinct from its owners

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Sole proprietorship

a single owner that's fully responsible for everything

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Partnership

non-incorporated businesses created by 2 or more people

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Crown corporation

owned by federal, provincial, municipal organizations

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Franchise

get a license to allow them to have access to business's proprietary knowledge

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Cooperative

A business owned equally by it members who have a common relationship , goals or economic purpose

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Not for profit

business that provide products /services without making profit (they are dedicated to improve community)

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Stakeholder

party that has interest in a company & can be affected/affect business (investors, employees, customers, suppliers)

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The underground economy

activity that is unreported / under-reported for tax or HST-purposes

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The sharing economy

economic system where assets/services are shared between private individuals for free of for a fee by internet (interactions on online platform)

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Real Gross Domestic Product (GDP)

The total value of all goods and servicews produced in Canada in a give year adjued by price changes also called constant dollars GDp~P.

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Accounting profit

the excess of a firms revenue over costs

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The theory of the firm

Relationship that exists between a firms revenue, cost and profits

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Total revenue

The price of a product multipled by the quantity demanded of the product Equation: total profit = (price x quantity sold)

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Total costs

The total of a firms fixed an total costs which includes all teh pruchases made by a firms productive resources it needs to produce its good or service equation: fc+vc

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Fixed Costs

Costs that are constant

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Variable Costs

An expense that changes

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Theory of the firm equation

Equation: total profit = total revenue - total costs

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The short run

period of time over which the firm’s maximum capacity becomes fixed because of the shortage of at least one resource

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The long run

period of time in which the firm can adjust both its fixed and variable costs to increase its max capacity

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Marginal revenue

The additional revenue gained for producing one more unit of its product

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Marginal costs

The additional cost gained for producing one more unit of its product

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Marginal analysis

Examination of associated cost & potential benefit for specific business activities/financial decision

  • see if lust cost for activity change will result in benefit for them

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Efficiency

producing at lowest possible cost

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Unit labour cost

Measures firm's efficency, obtained by dividing its total labour costs by the number of units it produces.

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Labour intensive

Industry in which labour rather than machinery. dominttes the production process

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Cottage system

People working in small shops or in their homes

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Capital intensive

Production in which machinery rather than labour dominates teh process, characteristic of the factory system

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Economies of scale

Refers to the greater efficiency that some firms can achieve when they produce a very large amount of output

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Perfect competition

Many producers and a uniform product

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Monopolistic competition

Many small to medium-sized firms sell a differentiated product, each having some control over price

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Oligopoly

A market structure characterized by a few large firms selling an identical or diferentiated product. Each with some substantial control over price.

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Monopoly

Market dominated by a single firm allowing it to set a profit max price

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Collusion

illegal agreement among competiting firms to set prices, limit output or reduce or eliminate competition

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Privatization

The sale of public assests in a government entriprise to private firms

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Deregulation

The opening of the market to more competition by eliminating government regulations put in place to limit competition

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Productivity

A firm's ability to maximum outputs from resources available usually measured as a firm's output/ worker

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Marginal product

the additional output that is created by an additional unit of labour

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Marginal revenue product of labour (MRPL)

the amount of additional revenue that is generated for a firm as a result of adding one more worker to the production process

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Wage differentials

are the differences in wage rates among different labour market

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Labour union

Organization of workers that collectively promotes the interest of its members and negotiates with their employers

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Trade union

Represent workers in a single occupation regardless of where they work

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Closed Shop

The employer may only hire workers who are already members of the union

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Open Shop

Union membership is voluntary, Right to Work, don't pay union dues but still enjoys benefits, no membership (employer sets terms of employment)

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The Rand formula

Canadian labour law requiring workers covered by collective bargaining contracts to pay union dues — whether or not those workers are union members, all workers in workplace must pay union dues even if they aren't apart of union

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Mediation

When a third party is brought in to study the situation and suggest possible ways to reach an agreement, helping both parties to find some middle ground

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Voluntary arbitration

Both parties agree to have a third party who acts as a judge, make a decision about which position is more fair & reasonable, arbitration is choosing one over the other

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Forced arbitration

The government orders two parties to submit their disputes to an arbitrator. Sometimes taken when a strike would be so disruptive to the general public that the government considered it undesirable

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Strike

Temporary work stoppage by employees, designed to force an employer to meet the union’s contractual demands

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Lockout

Occurs when an employer shuts down the place of employment in order to force workers to accept its contract offers

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